This lunchtime I will be travelling to Brighton for a meeting in TPR’s new offices with Nausicaa Delfas, TPR’s CEO and the woman calling for a change in mindset from the pensions industry.
I’ve two aims. Firstly to understand what she means by that call and secondly to influence her thinking to get a better pension system. I’m not going as a blogger, I too want to be an agent of that change through my work at AgeWage and the platform of Pension PlayPen.
The Pension Regulator is in a unique position to drive the agenda. Its CEO should be apolitical and to drive the agenda whatever the hue of Government. The CEO survives general elections and pledges to see through TPR’s agenda according to objectives that are set in stone. In short, the Pensions Regulator should ensure that the key Government policies on pensions are implemented successfully.
She is saying as much to the FT in this article published this morning
So Nausicaa Delfas carries a great deal of responsibility not just for pensions today , but for the long-term vision that politicians can establish but can rarely see through.
The long-term vision
As the Pension Commission becomes a historic memory, pension people have been calling for a reset, a next step after the success of auto-enrolment and the stabilisation of pensions following difficult years at the turn of the century. We are left with a less ambitious pension system but one that covers more workers and has the potential to turn from a system of pots – to a system where people save for a wage in later age.
A change in mindset must include a vision of pensions where people have the security of an income that lasts as long as they do, which brings not just security but prosperity in later life.
To me, this means making the money we save working harder and getting more efficient in turning the wealth we accumulate into lifetime income.
We should not ignore what a solid platform we have to do this. We have a system of payroll contributions to well governed workplace pensions that depends on over one million employers participating in funded pensions. Around 90% of eligible employees save for their retirement and we have achieved this without compulsion but through auto-enrolment.
The sums flowing into workplace pensions, of all hues, is a great credit to the Pensions Regulator who have created compliance with difficult auto-enrolment regulations and supervise the principal workplace pensions – the master trusts which are fast rivalling Australian Super Funds as commercially competitive, innovative and capable of creating scale in our system. They are the principal agents for achieving Government’s aims for better member outcomes.
The Pension Commission has taken as far as we are today but it was only designed to set us on our way. We now have to lay down the difficult second album and that is what the Mansion House reforms do.
They aim to create consolidation around three ways of delivering an income for life. DB will provide a high degree of security to a proportion of the population who are fortunate enough to have a degree of certainty. CDC will make pensions out of defined contributions but use the best endeavours of those managing the schemes and not guarantees from sponsoring employers. DC will build up pots which can be exchanged for a defined benefit annuity or a CDC pension or be spent as the saver chooses.
These are the three big themes of the difficult second album and the various tracks are consultation Reponses , calls for evidence and policy papers on how we consolidate, create better value through investment and how we cut the waste – such as the build up of small pots.
But the second album needs to be produced and delivered and that’s what TPR is about. TPR is not there to invest , though its sister organisation the PPF is. TPR is in place to encourage the new mindset of growth through the taking, not the avoiding of risk and if the phrase “new mindset” is going to mean anything, it is going to have new minds, people who lead the change in mentality.
Nausicaa Delfas and the tough next steps
Since September of last year, when the wheels came off , the pensions reset has been gathering pace and – in a meeting earlier this year – I realised that Nausicaa Delfas was leading change, not reacting to it.
She is implementing political change made by Government, delivered through the DWP and implemented in Brighton by TPR.
We can either ignore it , or accept it, but it will happen – I am sure. I hope to be able to communicate the change that is coming and through this blog, influence it to a tiny degree.
We need to make the difficult second album work.